How the Major Companies Stack Up on the Environment

Free Power Secrets

Making Your Own Fuel

Get Instant Access

ExxonMobil has been more conservative on environmental issues and more dismissive of climate concerns than any other major oil company. Its longtime chairman, Lee Raymond, routinely dismissed fears of global warming, claiming there was still significant uncertainty about the causes of climate change. A January 2007 report by the Union of Concerned Scientists accused ExxonMobil of spending millions of dollars to manipulate public opinion on the seriousness of global warming, and of drawing upon tactics from the tobacco industry's 40-year "disinformation campaign." The report notes that "the relatively modest investment of about $16 million between 1998 and 2004 to select political organizations has been remarkably effective at manufacturing uncertainty about the scientific consensus on global warming."61

Yet ExxonMobil has maintained its reputation as perhaps the best run and most disciplined oil company. It has the largest stock market valuation of any oil company, indeed of any investor-owned company in the world. It also has the greatest profits. But the company has resolutely resisted investments in renewable energy and alternative fuels. By its own account, ExxonMobil spent less than 1 percent of its 2005 revenues on environmental concerns, and half of these expenditures were for capital and cleanup operations at older, dirtier refineries.62

ExxonMobil claims that it would rather reinvest in what it knows, which is why it invests much more on upstream oil R&D than its rivals.63 Company executives continue to affirm that they have chosen not to pursue renewable energy options and aren't interested in chasing alternatives that offer little prospect of replacing fossil fuels.

Chevron, the second largest U.S. oil company, sometimes characterized as ExxonMobil's little brother, until recently had also been skeptical of climate concerns and also wasn't investing much in renewable and alternative fuels. It did have some investments in advanced batteries and other small nontraditional projects, but that was the result of the technology venture division it inherited from Texaco when it purchased that company.

That changed in 2006, as Chevron veered away from Exxon onto a new path. In full-page spreads splashed across opinion-leader magazines and newspapers, Chevron began emphasizing that oil demand was expected to grow 50 percent over the next 20 to 30 years and that a newfound commitment to energy efficiency and alternative fuels was needed. The company began investing in biofuels, advocating greater energy efficiency, and accepting the need to reduce carbon dioxide to prevent climate change. Rick Zalesky, a former refinery manager who took over Chevron's hydrogen and biofuels programs, described to us the epiphany Chevron experienced in early 2006. Until then, the company had seen alternatives to petroleum as competition. More biofuels had meant less oil sold. But they now accepted the reality that conventional oil supplies, especially those from non-OPEC

sources, were not going to meet projected demand. What he didn't say but surely understood was that international oil companies were having greater difficulty gaining access to oil controlled by the Saudis, Venezuelans, Iranians, and others, who were increasingly protective of their national resource and increasingly inclined to use it for political purposes. In any case, Chevron was now enthusiastic about finding new ways of supplying fuels to that thirsty market.

The second- and third-largest oil companies in the world, Shell and BP, are both located in Europe—Shell in The Netherlands and London, BP in London. They've both pursued more environmentally friendly public positions for a longer time. Shell formed a Shell Hydrogen subsidiary in 1999 and successfully developed a gasoline-to-hydrogen reformer by the following year in an attempt to facilitate the transition to fuel cell vehicles. In 2006, John Hofmeister, president of Shell Oil Company in the United States, said, "If we want to decrease our energy dependence to improve our energy security, we can. This will require us to manage demand, perhaps in new and somewhat different ways. And it will call for a culture of conservation that supports aggressive solutions for greater energy efficiency, without jeopardizing economic growth. We can focus on the areas of mobility, construction, urban planning, homes, high-rise and office buildings. All lend themselves to a culture of conservation, using energy in ways more efficient than we know about today."64

BP was even more dramatic. It gets credit for kicking off the industry's embrace of environmentalism. Lord Browne was the first oil CEO to acknowledge the reality of climate change. In May 1997, Lord Browne gave a speech at Stanford University in which he said that global warming was a real problem and that oil companies needed to both acknowledge that reality and begin dealing with it. The next year, when BP bought Amoco, an American oil company with extensive natural gas reserves, Lord Browne took that moment to reposition the company. The name was changed from British Petroleum to BP, and in 2002 it began using the tagline "beyond petroleum." BP's logo includes the letters BP in lowercase type with a green and yellow sunburst to emphasize its focus on environmentally friendly fuels and alternative energy, along with the words "beyond petroleum." Virtually all BP marketing since about 2000 speaks to the company's commitment to the environment. The repositioning was a dramatic success. A senior ad agency executive says, "There probably isn't a P.R. guy around who didn't wish he'd come up with that."65

Was BP "greenwashing" its public image, or was this a real shift in corporate responsibility? BP has certainly accumulated a credible track record. It owns a big solar energy company that held a 10 percent share of the world market in 2005; it has made significant efforts to reduce its own greenhouse gas emission; it funded a $20 million research program at Princeton on carbon sequestration and a massive $500 million program on biofuels at the University of California, Berkeley, and the University of Illinois; it coinvested in a $1-billion joint-venture hydrogen-fueled power plant in California; and it launched a thriving biofuels program.

At the same time, though, BP suffered a number of troubling setbacks. In an October 2007 court settlement with the U.S. government, the company paid $373 million in fines for manipulation of the propane market in 2004, a devastating accident in March 2005 at a BP refinery in Texas that killed 15 workers and injured hundreds more, and pipeline leaks in Alaska in 2006 that resulted from inadequate maintenance. While the company was straightforward in acknowledging its errors and offering immediate apologies, the image of the company as environmentally and socially responsible was tarnished. Indeed, ExxonMobil, which environmentalists love to hate, hadn't had problems of this magnitude in years, not since the Exxon Valdez spill in 1989.

In any case, whatever doubts one might have about Big Oil "greenwash-ing" its image instead of investing in actual social responsibility, the national oil companies are far, far worse societal stewards. They're far less concerned about the environment and human rights. They barely make a pretense of caring.66

The national companies also have little interest in energy efficiency and alternative fuels. Saudi Aramco is perhaps most active and most engaged. The company has been conducting in-house research on fuel cells, carbon sequestration, and fuel desulfurization for many years.67 Aramco, like other national oil companies, knows that oil could eventually be replaced by a different fuel, such as hydrogen, and it knows that stiff CO2 restrictions could harm its business. But Aramco and the others still have massive amounts of petroleum. In a major study of the five largest national oil companies in the Middle East, Valerie Marcel found in 2004 that "all the companies showed a lack of interest in the impact of the Kyoto Protocol and climate negotiations on future demand for oil and gas. . . . There was little awareness of the issue."68 The OPEC cartel fully expects to usher in the next 60 to 70 years until a replacement for oil might appear. And thus, even Aramco is putting at best a minimal effort into concerns about carbon.

Was this article helpful?

0 0
Guide to Alternative Fuels

Guide to Alternative Fuels

Your Alternative Fuel Solution for Saving Money, Reducing Oil Dependency, and Helping the Planet. Ethanol is an alternative to gasoline. The use of ethanol has been demonstrated to reduce greenhouse emissions slightly as compared to gasoline. Through this ebook, you are going to learn what you will need to know why choosing an alternative fuel may benefit you and your future.

Get My Free Ebook


  • Esmeralda
    How much does exxon mobil spend on green initiatives?
    9 years ago

Post a comment